Berkshire Hathaway, the conglomerate led by Warren Buffett, is soon expected to reveal the mystery stock into which his company has reportedly made a significant investment.
This holding could be valued at close to $5 billion, according to Barron’s analysis of the company’s first- and second-quarter filings.
Why It Matters
Buffett is perhaps the world’s most widely revered investor, given the staggering and market-beating returns Berkshire Hathaway has delivered during his six-decade tenure as the conglomerate’s chief. As chairman and CEO, Buffett transformed the textile firm into a diversified investment powerhouse with a market cap of $1 trillion.
Major holdings accrued by Berkshire are therefore monitored closely, as these give an insight into the investment strategies of one of the most respected minds in finance. A disclosure of a new stake can grab the attention of investors, who often view Buffett’s faith in a company as indicative of its underlying value.
What To Know
Berkshire Hathaway is expected to submit its 13-F report after the closing bell on Thursday. These reports—containing details of a company’s equity holdings—are submitted to the U.S. Securities and Exchange Commission typically 45 days after the end of the most recent calendar quarter (June 30), and are one of the few ways the public and fellow investors are able to gain insight into the portfolios and strategies of companies such as Buffett’s.
In its quarterly filings, the company discloses its five major holdings— American Express Company, Apple Inc., Bank of America Corporation, The Coca-Cola Company and Chevron Corporation—as well as other major investments. Smaller investments, meanwhile, are divided into three broad categories:
- Banks, insurance and finance;
- Consumer products;
- Commercial, industrial and other.
As Barron’s reports, the cost basis—original asset value—of the third category rose by $2 billion in the first quarter and $2.8 billion in the second quarter, suggesting that Berkshire’s could have purchased up to $4.8 billion of the mystery stock or stocks.
Warren Buffett, Chairman and CEO of Berkshire Hathaway, makes his way to a morning session at the Allen & Company Sun Valley Conference on July 13, 2023 in Sun Valley, Idaho.
Kevin Dietsch/Getty Images
The outlet noted that Berkshire requested confidential treatment for at least one stock purchased during the first quarter, and that it could do so in the upcoming 13-F, meaning this could remain a mystery for a while longer.
The last time Berkshire requested confidentiality treatment—which withholds information from the public and allows institutional investors to build positions without tipping off the market and triggering copycat trades—was in late 2023. Berkshire was able to secretly build up a significant position in the insurance giant Chubb, having been granted permission to delay this disclosure until May 2024, at which point its stake was worth $6.7 billion.
When Berkshire’s holding in Chubb was finally revealed, the stock rose over 4 percent and reached what was then a record high, according to the Wall Street Journal.
What People Are Saying
Financial and investing advice firm The Motley Fool wrote in June: “The reason a fund manager would request [confidential treatment] is because investors would pile in and drive up the share price if the position were publicly revealed. If a high-profile money manager with a sizable Wall Street following can quietly build up their stake in a public company, they can likely do so at an advantageous price.”
It added that there were 54 potential candidates for the mystery stock, including UPS, FedEx and Caterpillar.
What Happens Next?
As Barron’s noted, investors may have to wait until mid-November, when the company files its 13-F for the third quarter, to discover the provenance of the mystery stocks.
Buffett is set to step down from his role as Berkshire’s CEO at the end of the year, and announced in May that he will be handing the reins over to Greg Abel, vice chair of non-insurance operations.